Let’s not give taxpayer money away to benefit the wealthy

Christmas time in the nation’s capital is different from the rest of the country. In Washington, special interest groups attempt to insert themselves into the proverbial “Good List” to seek taxpayer handouts for their pet projects, whether deserved or not. 

The presents for these interests come via legislative tax packages and “extenders” that rear their head every year at about this time.

The solar power industry is one of those looking for their special carve-out via the Solar Investment Tax Credit (ITC). This provides a 30 percent tax credit to individuals and companies looking to retrofit their homes and commercial properties with solar energy technologies.

The federal government has been providing these tax benefits since 2005. They have been extended several times. If they are extended yet again, American taxpayers will be very close to possibly subsidizing the solar industry in perpetuity, regardless of the industry’s ability to stand on its own.

Solar energy experienced explosive growth between 2010 and 2016. In a study conducted for proponents of the tax credit, GTM Research reported that annual installations grew from just 849 megawatts in 2010 to more than 15,000 megawatts in 2016, a record-breaking year when the U.S. solar market nearly doubled its annual record for installations. Though tax incentives are factored into the growth, efficiency and affordability have driven it.

Proponents like to say that industries such as solar need taxpayer help to become a viable method of powering homes and businesses. But in the 14 years since the handout started, the solar industry and the technologies that power it have grown. No longer an emerging industry, it is now a form of power that does not need government incentives.

And one important fact about solar tax credits such as the ITC, often lost in the debate, is that question of who is most likely to benefit from the cost to American taxpayers. In short, it’s the rich. Scholarly efforts have identified that most “green energy” tax breaks ultimately go to wealthy Americans.  

Another way to look at it is that these are exactly the people who would likely invest in solar for their homes and businesses based on cost savings, regardless of the tax advantage.

Since most electricity bills are paid directly by tenants, homes owned by a landlord and then leased to a tenant likely would never get these energy upgrades. It is just as silly for a renter to invest in moving a home off the grid as it is for a landlord to make major efficiency investments in a home where the tenant, and not the home’s owner, will experience those savings.

It can cost more than $30,000 to convert a home to solar energy. That is a large upfront investment, but if the cost savings are as good as promised by the industry, it should be a cost that almost anyone owning a home of significant value would want to investigate. 

Ultimately, the solar ITC is a tax break that allows the affluent to invest in their own homes and businesses. Tax return data analyzed by The Energy Institute at Haas shows that the bottom three income quintiles have received about 10 percent of all credits, while the top quintile has received about 60 percent of them. 

The federal government should not be in the business of using taxpayer money to provide handouts to special interests. And what’s more, the technology behind the solar industry has reached a point that it no longer needs the support of middle-class working families. It’s fine for someone to decide that a major home investment is a good option for them, but the rest of us should not have to pay for it.

It may be the holidays, but special interests should not wake up to a gift under Washington’s Christmas tree. Industries that are clearly growing and succeeding on their own especially do not need taxpayer dollars wrapped up for affluent home and business owners.

Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all Americans. Follow him on Twitter @MarioHLopez.